Opinion
2013-04-25
In the Matter of GREECE TOWN MALL, L.P., Appellant, v. New York STATE et al., Respondents.
Feerick Lynch MacCartney, PLLC, Nyack (Dennis E.A. Lynch of counsel), for appellant. Eric T. Schneiderman, Attorney General, Albany (Owen W. Demuth of counsel), for respondents.
Feerick Lynch MacCartney, PLLC, Nyack (Dennis E.A. Lynch of counsel), for appellant. Eric T. Schneiderman, Attorney General, Albany (Owen W. Demuth of counsel), for respondents.
Before: MERCURE, J.P., LAHTINEN, McCARTHY and GARRY, JJ.
McCARTHY, J.
Appeal from a judgment of the Supreme Court (McNamara, J.), entered November 3, 2011 in Albany County, which dismissed petitioner's application, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, to review a determination of respondent Empire Zone Designation Board revoking petitioner's certification as an empire zone business enterprise.
In 2002, petitioner, the owner of a shopping mall, was certified as an empire zone business enterprise, allowing it to receive certain tax credits. The certification stated that it was effective through 2015. In June 2009, after the Legislature amended the Empire Zones Act (General Municipal Law § 955 et seq.), the Commissioner of Economic Development revoked petitioner's certification retroactive to January 2008. Upon petitioner's administrative appeal, respondent Empire Zone Designation Board (hereinafter the Board) upheld that decision. Petitioner commenced this combined proceeding pursuant to CPLR article 78 and action for declaratory judgment seeking, among other things, to annul the Board's determination that decertified petitioner as an empire zone business enterprise. Respondents moved to dismiss the petition. Supreme Court partially granted the motion, dismissing all but two causes of action and issuing declarations in respondents' favor. Petitioner then moved for, among other things, leave to amend its petition/complaint to add a cause of action seeking a declaration that its decertification could not be retroactively applied to January 2008. Supreme Court denied the motion to amend and, after respondents answered, dismissed the petition/complaint. Petitioner appeals.
Petitioner's appeal from the final judgment brings up for review any nonfinal orders that necessarily affect that judgment ( seeCPLR 5501 [a][1] ).
Supreme Court properly determined that General Municipal Law § 959(w) does not violate the N.Y. Constitution ( seeN.Y. Const, art. III, § 22). The power to tax lies solely with the Legislature and may not be delegated to an administrative agency ( seeN.Y. Const., art. III, § 1; art. XVI, § 1; Greater Poughkeepsie Lib. Dist. v. Town of Poughkeepsie, 81 N.Y.2d 574, 579–580, 601 N.Y.S.2d 94, 618 N.E.2d 127 [1993] ). Consistent with the N.Y. Constitution, the taxes that petitioner was required to pay were enacted by the Legislature. The Department of Economic Development (hereinafter DED) did not impose any tax; it merely determined whether businesses were entitled to a credit against legislatively-imposed taxes ( see James Sq. Assoc. LP v. Mullen, 91 A.D.3d 164, 172–173, 933 N.Y.S.2d 485 [2011] ). In doing so, DED was implementing a legislative mandate, which is constitutionally permissible ( see Matter of Medical Socy. of State of N.Y. v. Serio, 100 N.Y.2d 854, 864–865, 768 N.Y.S.2d 423, 800 N.E.2d 728 [2003];Matter of Carpenter Tech. Corp. v. Commissioner of Taxation & Fin., 295 A.D.2d 830, 834, 745 N.Y.S.2d 86 [2002],lv. denied99 N.Y.2d 501, 752 N.Y.S.2d 588, 782 N.E.2d 566 [2002];Rex Paving Corp. v. White, 139 A.D.2d 176, 184, 531 N.Y.S.2d 831 [1988] ). Thus, the court properly declared that the Board's determination did not violate the N.Y. Constitution.
Petitioner should have been granted leave to amend its petition/complaint to include a cause of action seeking a declaration that any revocation of petitioner's status as an empire zone business enterprise may not be applied retroactively to January 2008. “Leave to amend a pleading should be freely granted as long as the amendment does not plainly lack merit and no prejudice will befall the opposing party” ( Backus v. Lyme Adirondack Timberlands II, LLC, 96 A.D.3d 1248, 1250, 947 N.Y.S.2d 639 [2012] [citation omitted] ). Although Supreme Court found that the proposed cause of action had no merit, that determination was based upon a trial court decision that has since been modified by this Court ( Matter of Hague Corp. v. Empire Zone Designation Bd., 96 A.D.3d 1144, 1147, 947 N.Y.S.2d 622 [2012],appeal dismissed19 N.Y.3d 1016, 951 N.Y.S.2d 712, 976 N.E.2d 240 [2012] ). Based upon this Court's rulings—in circumstances similar to petitioner's—that revocation of a business's certification cannot be made retroactive to January 2008 ( see id. at 1147, 947 N.Y.S.2d 622;Matter of WL, LLC v. Department of Economic Dev., 97 A.D.3d 24, 32–33, 943 N.Y.S.2d 661 [2012],appeal dismissed19 N.Y.3d 1021, 951 N.Y.S.2d 717, 976 N.E.2d 245 [2012],lv.granted20 N.Y.3d 853, 2012 WL 5950416 [2012];Matter of Morris Bldrs., LP v. Empire Zone Designation Bd., 95 A.D.3d 1381, 1382–1383, 943 N.Y.S.2d 678 [2012],lv. denied19 N.Y.3d 812, 2012 WL 4017771 [2012];see also Matter of J–P Group, LLC v. New York State Dept. of Economic Dev., 91 A.D.3d 1363, 1364, 937 N.Y.S.2d 766 [2012];James Sq. Assoc. LP v. Mullen, 91 A.D.3d at 172–174, 933 N.Y.S.2d 485), and based on a lack of record proof that respondents would be prejudiced, we grant petitioner leave to amend its petition/complaint as proposed.
Supreme Court properly declared that respondents may not be estopped from revoking petitioner's certification as an empire zone business enterprise. Because “tax legislation is not a governmental promise, [taxpayers have] no vested or actionable right ... to the benefit of a tax statute or regulation” ( Matter of Varrington Corp. v. City of N.Y. Dept. of Fin., 85 N.Y.2d 28, 33, 623 N.Y.S.2d 534, 647 N.E.2d 746 [1995] ). A claim of estoppel may only be asserted against a government agency in the rarest of situations and may not be invoked to prevent an agency from discharging its statutory duties ( see Matter of New York State Med. Transporters Assn. v. Perales, 77 N.Y.2d 126, 130, 564 N.Y.S.2d 1007, 566 N.E.2d 134 [1990];Matter of Village of Fleischmanns [Delaware Natl. Bank of Delhi], 77 A.D.3d 1146, 1148, 909 N.Y.S.2d 564 [2010] ). After the Legislature amended the Empire Zones Act, the Board discharged its statutory duty to review appeals of the DED Commissioner's decisions to decertify empire zone business enterprises ( seeGeneral Municipal Law § 959[w] ). Under these circumstances, where petitioner did not have a vested right to continue receiving tax credits and the Board was fulfilling its duty under the law, the court properly held that estoppel may not be invoked.
To the extent that petitioner seeks to estop respondents from applying its decertification retroactively to January 2008, that argument may be raised upon remittal in connection with the newly-added cause of action.
Finally, for the reasons stated in Matter of Office Bldg. Assoc., LLC v. Empire Zone Designation Bd., 95 A.D.3d 1402, 1405–1406, 943 N.Y.S.2d 668 [2012], and as conceded by respondents, we must remit to the Board because its determination lacks sufficient detail to permit intelligent court review, and the affidavit submitted by respondents did not cure this defect.
ORDERED that the judgment is modified, on the law, without costs, by reversing so much thereof as (1) dismissed petitioner's fourth and sixth causes of action seeking to annul the determination of respondent Empire Zone Designation Board revoking petitioner's certification as an empire zone business enterprise and (2) denied petitioner's motion to amend its petition/complaint; motion granted and matter remitted to the Supreme Court for further proceedings not inconsistent with this Court's decision; and, as so modified, affirmed.